Enron Fast Facts
CNN Editorial Research
Here’s a look at Enron, an energy trading company that collapsed after a massive accounting fraud scheme was revealed. Its 2001 bankruptcy filing was the largest in American history at the time. Estimated losses totaled $74 billion.
Facts
Enron was ranked as America’s fifth largest company by Fortune magazine in 2002, despite its 2001 bankruptcy filing.
An independent review published in 2002 detailed how executives pocketed millions of dollars from complex, off-the-books partnerships while reporting inflated profits to shareholders.
Executives including Kenneth Lay and Jeffrey Skilling were prosecuted for fraud-related crimes.
Key figures sold their stock shortly before the company announced a sharp downturn in earnings.
Lower-level employees were encouraged to invest in company stock for their retirement savings just before the company collapsed. The workers later filed a class action lawsuit and won an $85 million settlement.
Timeline
1985 – Houston Natural Gas merges with Omaha-based InterNorth to form Enron.
1986 – Lay is appointed chairman and CEO of Enron.
1989 – Enron enters the natural gas commodities trading market.
1990 – Skilling, an energy consultant, is hired to run a new subsidiary called Enron Finance Corp.
February 12, 2001 – Skilling becomes CEO while Lay stays on as chairman.
August 14, 2001 – Skilling resigns and Lay becomes CEO again.
August 2001 – Sherron Watkins, a vice president, warns Lay that the company could “implode in a wave of accounting scandals.”
October 16, 2001 – Enron announces a third-quarter loss of $618 million. The company later reveals that it overstated earnings dating back to 1997.
October 31, 2001 – The company discloses that it is under formal investigation by the Securities and Exchange Commission.
November 9, 2001 – Enron confirms that it has agreed to be purchased by a rival company, Dynegy for $9 billion. On November 28, Dynegy announces it has terminated merger talks with Enron.
December 2, 2001 – Enron files for Chapter 11 bankruptcy protection.
January 9, 2002 – The US Department of Justice opens a criminal investigation into Enron’s collapse.
January 10, 2002 – Arthur Andersen LLP, the accounting firm that handled Enron’s audits, discloses that its employees had destroyed company documents.
January 15, 2002 – The New York Stock Exchange suspends trading of Enron shares.
January 17, 2002 – Enron ends its partnership with Arthur Andersen.
January 23, 2002 – Lay resigns as CEO. He later steps down from the board of directors.
January 25, 2002 – Former Enron vice chairman J. Clifford Baxter is found dead in an apparent suicide.
February 12, 2002 – Lay invokes his Fifth Amendment right before the Senate Commerce Committee.
March 14, 2002 – The DOJ indicts Arthur Andersen for obstruction of justice. A jury later returns a guilty verdict for the accounting firm. The Supreme Court later overturns the conviction.
February 19, 2004 – Skilling is charged with 35 counts of fraud and insider trading. He pleads not guilty.
July 7, 2004 – Lay is indicted. He is charged with conspiracy, securities fraud, wire fraud, bank fraud and making false statements. During his arraignment the next day, he pleads not guilty to all 11 charges and is released on $500,000 unsecured bond.
May 25, 2006 – Skilling and Lay are convicted of conspiracy and fraud. Skilling is also convicted on one count of insider trading and five counts of making false statements. The jury acquits Skilling on nine additional counts of insider trading.
July 5, 2006 – Lay dies of a heart attack while awaiting sentencing.
September 8, 2008 – A class action lawsuit filed by shareholders and investors is settled in federal court. The $7.2 billion settlement will be paid out by a group of banks accused of participating in the accounting fraud scheme.
May 11, 2009 – Skilling files a petition with the Supreme Court to overturn his conviction after appeals with the lower courts fail.
May 9, 2010 – “Enron,” a musical about the company’s collapse, closes on Broadway 12 days after opening amid slow ticket sales.
April 16, 2012 – The Supreme Court rejects Skilling’s appeal.
June 21, 2013 – A federal judge reduces Skilling’s sentence by more than 10 years. In return, Skilling agrees to stop challenging his conviction and forfeit roughly $42 million that will be distributed among the victims of the Enron fraud.
December 8, 2015 – The SEC announces that it has obtained a summary judgment against Skilling, permanently barring him from serving as an officer or director of a publicly held company. The judgment settles a long-running civil suit by the SEC.
February 21, 2019 – Skilling is released after serving over 12 years in federal prison.
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